Female top managers and credit risk: evidence from Italian firms

Abstract

Purpose The recent literature on corporate governance and gender diversity underlines that those differences may go beyond a pure or direct effect on firms’ performance and in this vein, this study aims to investigate whether the presence of women in leading positions can affect the credit rating indicators. Design/methodology/approach The authors focus on Italian manufacturing firms, as well as small and medium firms (SMEs), that are often under-represented in previous studies, despite their importance in many economies. The authors extract data on directors and top managers as well as rating classes and credit score indicators, and using a fixed-effects model, the authors analyze the relationship between credit risk mitigation and the inclusion of women among top managers, consistently with the rising empirical literature focused on risk perceptions. Findings The authors find a significant negative relationship between female participation in top management and credit risk, with a greater impact associated with smaller firms, where the presence of a female top manager might make the difference. The results are robust to different model specifications and estimation strategies, and the authors find different magnitudes of the effects also according to the geographical location of the firm. Research limitations/implications Because of the chosen sample of manufacturing firms, the research results may lack generalizability. Therefore, researchers are encouraged to expand the study and test the approach elsewhere. Originality/value The authors add new and more robust empirical evidence of a negative relationship between female participation in the top management and credit risk by focusing on the entire population of Italian nonlisted manufacturing firms.